The end of the Great Keynesian Experiment is upon us. Prepare accordingly.

Friday, January 7, 2011

Friday Wrap

Well, we didn't get the "mean reversion" that I had hoped for yesterday but, shit, if you'd told me at about 7:00 this morning that we'd close back above 1365 and 28.50, I'd have kissed ya. Not a great day but, by no means was it a disaster, either.

One quick point of order, I clearly ascribe a lot of PM price movements to the intervention of the dreaded Evil Empire. However, be careful not to assume they are behind every trade. The majority of the time, the EE simply sets things in motion. They clearly did this back on Monday afternoon and again Tuesday morning. As usual, they have achieved their desired effect. Yesterday and today, however, have been all about the hedgies and algos trading off of movements in the USDX. There is good news on that front in that the March USDX is still in its range. Its through the 81.20 level but no one should be thinking about a sustainable dollar rally until/unless it moves through 82. Since I can't see that happening, the $ should next begin dropping back toward the center of the range (back under 80) and that will certainly provide some help for our PMs.

Lastly, this blog is growing quickly and I recognize its not about me, its about you. The quality of content in the comments is simply outstanding. Thanks to you all!
You're not an internet phenomenon until you've taken something viral so, in that theme, I submit this video. It was sent to me via email by a reader who asked me to post it. Here you go. Let's watch the "total views" for the video over the weekend. Currently, its at about 1600.http://www.youtube.com/watch?v=ExBE651_vOY

On BullionVault.com we only sell bullion which is physically under our control, so we find ourselves currently unable to offer silver on our own market. Naturally the market remains open for all our customers to quote their own prices, but as we ourselves currently have no silver to offer, there is a tendency to higher prices for both buyers and sellers. Buyers are advised to be appropriately cautious when confirming their order's limit price.

We are advised silver will be delivered on Tuesday 11th Jan 2011."

To be clear - a substantial purchaser of physical metal from the LBMA can no longer get timely delivery of London Good Delivery bars - the very foundation of the physical metals trade.

I interpret this as further evidence that the LBMA vaults contain little at this point but the occasional moth fluttering about and wondering why the place seems so much roomier than usual.

Physical scarcity is becoming fact no matter what the official price is there is less physical around to purchase.Wwhat is happening unofficially and officially appear to be rapidly diverging worlds,how soon before the official price reflects the true real world reality is anyones guess.

There are hardly any 'Silver Mines' as such. The vast majority of Silver is produced as a byproduct of mining base metals, such as Copper.

Now that Chinese stockpiling of such metals seems to be tailing off, it seems unlikely (Absent a miraculous recovery in global industrial activity) that any of these mines will be ramping up production anytime soon. Quite the opposite, in fact.

Aurcana (AUNFF) is set and financed to re-open the Shafter Silver mine in Texas. Latest press release says, " The Shafter Silver Mine is scheduled to start up production within 18 months of securing permits and financing, producing 3.8 million ounces of silver in the first year". The financing was just secured. I do have shares in it and have done well with it. As the U.S. is required to use U.S. silver in the silver eagles, Shafter will make a significant contribution to U.S. supplies and have a "captive" market for it's product.

Hey TF,Love the blog. As for the video, let's hope it doesn't go viral. The skeptics, and I've been in touch with a few, will have a field day debunking this video.

Let's just face the facts. The EE will do what it does until it can't anymore (google hypertiger wisdoms). At that time all hell will break loose. For those of us in the know, let's just continue preparing and praying that that hell breaking day doesn't occur in our lifetimes. After all who wants to be proven right on the date Armageddon occurs?

I have a fair amount invested in gold & silver mining companies, but one needs to cautious with the miners. If you are into the miners, I recommend doing it in a diversified way. As Mark Twain once said....“A mine is a hole in the ground with a liar at the top".

Mark Twain said "a fiat mine (fed) is a building on the ground with a liar inside and a printing press procesing ink and celulose concetrate and producing fiat welth".As for him saying that a mine is a hole with a liar on top its pure EE propaganda..;)There are a dozen fiat mines in the Us.

george.....My point was not EE propraganda. My point is to diversify into several miners because averaged out they are going to do very well, but there are small minority of miners, particularly the junior miners, that aren't what they claim to be. You would be pretty let down if you did the right thing & invested in PM's & then found out that > 50% of your profits were nullified by a junior mining company that went belly up. It only makes sense to diversify a little.

As we get sidetracked by mainstream media "economists" trying to explain the newly announced "job" numbers, don't forget about our friends in Portugal and Spain. Portugal 10-year bond yields spiked at 7.1 percent on Friday which was only a euro-era high. Could this be why DXY has been gaining (baking-in) strength in advance of another bailout package?

If Turd doesn't mind, I might as well whore my drunken blog out for those that want to decline their IQ. http://www.thecoloredsky.com/

It seems clear that the only thing standing in the way of a huge correction in the PMs is the BoS. We need to keep in mind that the BoS is only so big. When it becomes prudent to stand aside, they will.

Sub-$1,200.00 gold and sub-$20.00 silver are realistic and a strategy of holding physical and accumulating cash to BT(really big)FD is one worth considering.

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About Me

"Turd Ferguson" has been involved in the securites "industry" for over 20 years. He first received his NASD licenses in June of 1990. Ultimately disgruntled by the fraud known as "financial planning", he retired to a career as a serial entrepreneur in 2008. The Turd is NOT a soothsayer, a psychic or a witch. After all these years, he simply has a decent handle on the PM "markets". You can reach The Turd by email at tfmetalsreport@gmail.com. If you are polite and not an AGA, he will probably answer you in short order.

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